HUD Under Trump Redirects Majority of 2026 Housing Funds, Endangering 170,000 as Grants Expire Mid-Winter

A quiet policy draft inside HUD is about to become a very loud reality: permanent housing funds are being slashed, and the fallout could hit some of the country’s most vulnerable residents first.

According to two HUD employees familiar with the plan, the agency is poised to announce that most of the 2026 funding for the Continuum of Care program will be pulled away from permanent housing and funneled into short-term, transitional setups that require participants to work or provide services. Internal HUD materials estimate that the change could leave as many as 170,000 people vulnerable to homelessness.

The timing adds another layer of stress. HUD plans to open the next grant application period in the coming weeks and close it on Jan. 23—just days before Congress must finalize HUD’s budget. Many existing grants will expire before the new awards are issued, leaving some projects without support during the coldest stretch of the year. HUD’s review process normally lasts four months, meaning the first half of 2026 could start with widespread funding gaps.

Roughly one-third of all program grants are set to end between January and June, according to national homelessness groups. Those programs would run out of money long before HUD finishes awarding the next round.

Inside the agency, staff worry that the 10-week application window is hardly enough for local providers to rewrite proposals around the new rules, which dramatically reshuffle funding priorities.

HUD has not formally confirmed the policy shift. In a brief statement, the agency said only that no announcement had been made. A spokesperson previously hinted at the direction HUD was moving, saying the department “is no longer in the business of permanently funding homelessness without measuring program success at promoting recovery and self-sufficiency.”

A press conference is expected after the policy is released, featuring HUD adviser Caitlyn McKenney and special government employee Robert Marbut.

On Capitol Hill, the pushback has already begun. 42 Senate Democrats sent a letter to HUD Secretary Scott Turner urging him to halt the changes. They argued that the move appears to contradict the McKinney-Vento Homeless Assistance Act and dismisses decades of evidence showing permanent supportive housing is more effective—and less expensive—than more temporary models.

HUD did not respond to questions about the letter.

Internal documents show how dramatic the shift would be. About 87% of Continuum of Care funding scheduled for 2026 is currently tied to permanent housing. Under the new structure, only 30 percent could be used for that purpose. Permanent housing funds would drop from $3.3 billion to around $1.1 billion.

The move lines up with President Donald Trump’s 2026 budget request, which proposes cutting the entire CoC program.

Even some Republicans have raised alarms. More than 20 House members, including several from New York, warned HUD in October that sudden changes could destabilize programs serving people with severe disabilities, chronic health conditions, mental illness, addiction, and aging-related needs.

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